2017 FORM 1099-Q GROSS DISTRIBUTION 1,768.00 .the funds are distributed $500.00/ semester??
EDIT: 2/5/2017 This post is over two years old, yet folks still seem to be finding it first in their searches. So I went ahead and updated it with the information for the 2016 tax return. It does apply to returns back to 2012 in case you're filing or amending a past year's return. (Returns prior to 2013 can't be amended unless you will OWE tax. and you can't use the TurboTax program for 2012 or earlier returns.)
College Education Expenses
Colleges work in academic years, while the IRS works in calendar years. So the reality is, it takes you 5 calendar years to get that 4 year degree. With that said:
- Scholarships and grants are claimed/reported as taxable income (initially) in the year they are received. It does not matter what year that scholarship or grant is *for*
- Tuition and other qualified education expenses are reported/claimed in the tax year they are paid. It does not matter what year they pay *for*.
Understand that figuring out who claims the student as a dependent, and determining who claims the education expenses & credits, is two different determinations. It depends on the specific situation as outlined below. After you read it, I have also attached a chart at the bottom. You can click on the chart to enlarge it so you can read it. If it’s still to hard to read on your screen then right-click on the enlarged image and elect to save it to your computer. Then you can double-click the saved image file on your computer to open it, and it will be even easier to read.
Here’s the general rules gisted from IRS Publication 970 at http://www.irs.gov/pub/irs-pdf/p970.pdf Some words are in bold, italicized, or capitalized just for emphasis. This is because correct interpretation by the reader is everything. Take the below contents LITERALLY, and do not try to “read between the lines”. If you do, you’ll interpret it incorrectly and risk reporting things wrong on your taxes. For example, there is a vast difference between “can be claimed” and “must be claimed”. The first one indicates a choice. The second one provides no choice.
If the student:
Is under the age of 24 on Dec 31 of the tax year and:
Is enrolled in an undergraduate program at an accredited institution and:
Is enrolled as a full time student for one academic semester that begins during the tax year, (each institution has their own definition of a half time student) and:
the STUDENT did NOT provide more that 50% of the STUDENT’S support (schollarships/grants received by the student ***do not count*** as the student providing their own support)
Then:
The parents will claim the student as a dependent on the parent's tax return and:
The parents will claim all schollarships, grants, tuition payments, and the student's 1098-T on the parent's tax return and:
The parents will claim all educational tax credits that qualify.
If the student will be filing a tax return and:
The parents qualify to claim the student as a dependent, then:
The student must select the option for "I can be claimed on someone else's return", on the student's tax return. The student must select this option ieven f the parent's qualify to claim the student as a dependent, and the parents do not claim them.
Now here’s some additional information that may or may not affect who files the 1098-T. If the amount of scholarships/grants exceeds the amount of qualified education expenses, the parent will know this when reporting the education on their tax return, because the parent will not qualify for any of the tax credits. (They only qualify for tax credits based on out-of-pocket qualified expenses not covered by scholarships/grants.) Also, the parent’s will not qualify for the credits depending on their MAGI which is different for each credit, and depends on the marital status of the parent or parents.
In the case where scholarships/grants covers “all” qualified education expenses, the parent’s don’t need to report educational information on their dependent student at all – but they still claim the student as a dependent if they “qualify” to claim the student.
If the scholarships/grants exceed the qualified education expenses, then the student will report the 1098-T and all other educational expenses and scholarships/grants on the student’s tax return. The student will pay taxes on the amount of scholarships/grants that are not used for qualified education expenses. However, if the student’s earned income reported on a W-2, when added to the excess scholarships/grants does NOT exceed $6200, then the student doesn’t even need to file a tax return, and nothing has to be reported.
If the student has any other taxable income not reported on a W-2, and it exceeds $400, (not including taxable portion of scholarships/grants) then most likely it’s considered self-employment income. That will require a tax return to be filed and the student will have to pay the Self-Employment tax on that income.
Finally, regardless of the student’s W-2 earnings, if any taxes were withheld on those earnings and it was less than $6200, then the student should file a tax return so as to get those withheld taxes refunded.
1099-Q Funds
First, scholarships & grants are applied to qualified education expenses. The only qualified expenses for scholarships and grants are tuition, books, and lab fees. that's it. If there is any excess, then it's taxable income. It automatically gets transferred to line 21 of the 1040 with an annotation of "SCH" next to it.
Next, 520/Coverdell funds reported on 1099-Q are applied to qualified education expenses. The qualified expenses for 1099-Q funds are tuition, books, lab fees, AND room & board. That's it. If there are any excess 1099-Q funds they are taxable. The amount is transferred to line 21 of the 1040 with an annotation of "SCH" next to it.
Finally, out of pocket money is applied to qualified education expenses. The only qualified expenses for out of pocket money is tuition, books, and lab fees. Room & board is NOT a qualified expense for out of pocket money.
When you have a 1099-Q it is extremely important that you work through the education section of the program in the order it is designed and intended to be used. If you do not, then there is a high probability that you will not be asked for room & board expenses, and you could therefore be TAXED on your 1099-Q funds.
Finally, if "all" qualified expenses are covered by scholarships, grants, 1099-Q funds and there is ANY of those funds left over that are taxable, then while the parent can still claim the student as a dependent, it is the student who will report all the education stuff on the student's tax return. That's because the STUDENT pays the taxes on any excess scholarships, grants and 1099-Q funds.
I need help here. My daughter is 16 and is my dependent. She has both a 1099-MISC for Modeling work of Box 7 of $804 and 1098-T for Box 2 of $439 and Box 5 of $397 for one College Level Class she took. TT is allowing me a Lifetime Learning Credit and Tuition and Fee Deduction after the questionare on my return even though she was Less than half time student and this was a qualified instituition but only a High School student in 10th grade obviously. This allowing a $130 extra on our Refund. Questions:
1. Can we claim that 1098-T on our return?
2. I assume she has to file her own return too as greater than $600 from the 1099-MISC or does she claim the 1098-T, which and who needs to file what on who's return?
The last paragraph basically makes the decision for you. "If the scholarships/grants exceed the qualified expenses, the student will report the 1098-T". Since box 5 exceeds box 1 or box 2, that applies.
The "more than $6100" part doesn't apply, because she has self-employment income that exceeds $400 and is subject to the SE tax.
Your daughter will still select the option for "I can be claimed on someone else's return", since I'm sure there's no question that your daughter did not provide more than 50% of her own support in 2014.
I think you answered the goodman user. I ended up posting my own and seemingly on our situation our daughters 1098-t needs to reported on our return since she is our dependent based on another TT Super Users answer.
That happens when you get add-on users in a thread. Easy to get confused. To remove all doubt, you might want to read the actual IRS publication yourself, as referenced in the original answer above.
Where should we enter depended child's tuition fees (form 1098-T) in Turbo tax
All that education stuff is entered under the Deductions & Credits tab in the Education section. When you click that tab, you may then need to click the "I'll choose what to work on" button to see the list of items. The Education section is in that list, and you may have to scroll down to it.
My son had a room and board scholarship as well as tuition, I can see this is taxable, and we do not qualify for any education credits, but I am trying to find out where is this entered in his tax return (Where he can be claimed as a dependent on someone else's return. There is no where in the income section that talks about scholarships other than unearned income section and that takes you off into never never land and it never even asks you the amount of scholarships received. Help!
I have a question of my own first. Why do you not qualify for any of the credits as a a parent claiming the student as a dependent on your tax return? Is it because all of his qualified education expenses were covered by scholarships and grants?
Now to answer your question - On the student's tax return select the Personal Info tab and elect to edit the primary tax filer's (which of course, is the student) information. Work it through, and on one of those screens will be a checkbox for "Someone else can claim [NAME] on their tax return". Select it, and then finish working through the rest of the screens, so your selections will "take".
Finally, in case it helps clarify for you or anyone else reading this thread...........
Take note that in IRS Pub 970 there is NO requirement for the parent to provide more than 50% of the student's support. The requirement is on the student. That requirement is, if the STUDENT provided LESS than 50% of the STUDENT'S OWN SPUPORT, then the parents qualify to claim that student as a dependent. The publication also specifically states that scholarships and grants do NOT count as the student providing their own support.
Therefore, if the student received $80,000 in scholarships, used $20,000 of it to pay qualified education expenses, and used the remaining $60,0000 to live off of for the entire year, the student did NOT provide more than 50% of the STUDENT'S own support, and the parent's qualify to claim that student as a dependent. The fact that the parent's may not have contributed one penny to the student's support during the tax year is irrelevant and does not matter one iota. THe parent's still claim the student as a dependent, and in this specific scenario, the student will report all the education stuff on the student's tax return. That means the student will pay the taxes on the excess scholarships and grants that were NOT used for qualified education expenses.
Hey Carl, was wondering if you could help me out. I posted this (<a rel="nofollow" target="_blank" href="https://ttlc.intuit.com/questions/3573269-do-i-have-to-file-my-1098-t-if-my-parents-claimed-me-as-dependent-and-already-included-it-in-their-tax-filing?jump_to=comment_5745970">https://ttlc.intuit.com/questions/3573269-do-i-have-to-file-my-1098-t-if-my-parents-claimed-me-as-dependent-and-already-included-it-in-their-tax-filing?jump_to=comment_5745970</a>) earlier and am still having my doubts. Mind taking a look?
Okay, this is where I'm still confused. My son's tuition, room and board, books, etc is all paid by scholarships, grants, & financial aid. Do I still claim his 1098-T? Also, I have my own 1098-T for student loan interest I can claim. Will I get in trouble for claiming both and how would I claim it on TurboTax?
So based on this discussion, my 19 yr old full-time college student will be claiming her own 1098-T as Box 5 exceeds Box 2 on 1098 AND she has earned income on W-2 that when added to excess scholarships exceeds $6200. All of her qualifying expenses were covered by the GI Bill. So, my question is how to I remove this off my tax return? I will still claim her as a dependent.
I have basically the same scenario as jmalibu. I completed my wifes and my taxes first and filed them. Then while doing the taxes for 19 yr old full time student found out the 1098t should go on her return. She had more scholarship than educational expenses. When amending my return, specifically what is the process to remove the 1098t from my taxes. Thanks
This article is very helpful. Is anyone on this thread aware of an update to this based on 2018 tax law changes?
just to clarify - we claim our 19 year old daughter on our taxes but I just want to make sure I'm doing this right. She received a 1098-T from her university - in box 5, it shows she received $70,895 in scholarships and grants, and only $55,403 of that was in box 1. So we will end up claiming the difference of $15K or whatever on her OWN taxes, right? In addition to the $2,000 she made in part time work over the year?
Also - we paid around $1,000 in addition to her university in 2019 for the tiny bit that her scholarships didn't cover. Does that go anywhere on taxes? And we don't claim any of that excess scholarships OR credits on our taxes correct?
You should enter the form 1098-T information on her tax return. You will have an option to enter the additional expenses when you enter the form. She will report the income on her return along with her wage income.
You are correct, you do not report anything on your tax return. If the education expenses had been more than the scholarship income, then you could report the 1098-T information on your tax return and you may have been eligible for an education credit.
So we will end up claiming the difference of $15K or whatever on her OWN taxes, right?
You misworded that. "we" should be "she". But yes, the student will report "all" of the education stuff on their own tax return. The student will still select the option for "I can be claimed on someone else's return" and the parent will still claim the student as a dependent on the parent's return.
Now for the student when they report this on their return, the taxes they will pay only on the excess scholarships/grants will be at the "higher" parent's tax rate. So don't be surprised if the student asks you for your personal income information. They are required by law to provide it, for the purpose of determining the tax rate the excess scholarships will be taxed at. Since the excess scholarship money plus her earned income exceed $12,350 she is required to file a tax return.
Keep in mind that the 1098-T is not always inclusive. If there are scholarships that were awarded in 2019 that are not include on the 1098-T, then that will increase the student's taxable income. Likewise, if there are qualified education expenses (such as books, which is common) not included in box 1, that will decrease the amount of taxable scholarship money. If those expenses not included in box 1 are actually enough to exceed the total of all scholarships received, then guess what? The parent reports the education stuff on the parent's return!
Another thing too, is that if the student was not paid the excess scholarship directly by the school, that would mean the school is holding the excess to "apply" it to 2020 qualified expenses. If that's the case, then the student needs to indicate that on their tax return so that the excess they did not physically receive will not be taxed on their 2019 tax return. Someone also needs to keep track of the "exact" amount held over by the school, because someone (you or the student) will have to report that amount on the 2020 return when that gets done next year.
Finally, do understand that neither you or the student will get "any" education credits for 2019 if in fact, all qualified education expenses were 100% covered by scholarships/grants.
we paid around $1,000 in addition to her university in 2019 for the tiny bit that her scholarships didn't cover.
Based on the fact that her scholarship income for 2019 exceeded the qualified education expenses it was used to pay for, that "tiny bit" was apparently not a qualified education expense. But I suspec that $1K was for books, and that amount will reduce the amount of taxable scholarship income your daughter will pay taxes on. Remember, if your daughter is claiming the education stuff, then she claims "EVERYTHING" related to the education. You still claim her as a dependent, but you don't report anything concerning her education costs at all.
Thank you for clearing that up - and yes by "we" I meant her taxes but I guess I meant "we" are helping her file her taxes. She may be a smart kid with lots of scholarships but I still think she'll pull the little girl card when it comes to filing taxes and ask her mommy for help. 😉
But actually that brings me to a different question - the $1000 was not books, it was the amount paid to the school. The books she paid for separately. So is it safe to assume that what we paid was for qualified expenses? How would we know what the extra we paid for was if we are billed for the amount that scholarships didn't cover?
Doesn't matter that you paid the school any money, since scholarships exceed qualified education expenses. This is how the IRS sees it:
First, scholarships & grants are applied to qualified education expenses. The only qualified expenses for scholarships and grants are tuition, books, and lab fees. that's it. If there is any excess, then it's taxable income on the student's return. It automatically gets transferred to and included in the total on line 7 of the student's 1040.
Next, 529/Coverdell funds reported on 1099-Q are applied to qualified education expenses. The qualified expenses for 1099-Q funds are tuition, books, lab fees, AND room & board. That's it. If there are any excess 1099-Q funds they are taxable. The amount is included in the total on line 7..
Finally, if there are any qualified education expenses left to pay (which does not include room and board) out of pocket money is applied to qualified education expenses. Only the out-of-pocket monies applied to the qualified education expenses of tuition, books and lab fees is eligible for any of the education credits.
So in your case, there are no out of pocket expenses that were applied to any qualified education expenses. Not a penny.
Unique situation trying to find an answer. My son was enrolled in college for academic year 2018-2019. We the parents claimed him as a dependent in 2018 and filed the 1098T (Box 1- $17,903 and Box 5- $13,250) and received the educational credits for that year. However, I did not support him in 2019 as he withdrew from his classes early spring semester of 2019, had a full time job, was no longer living with me and had a child in June 2019. He is filing his own taxes for the first time for the year 2019 and we're wondering if he should file the 1098T information or should we the parents, as we made payments toward his tuition with a Parent Plus Loan. The amount of payments received in Box 1 for the 2019 1098T form exceeds box 2 by 8K. Should this be on his returns or ours? Thanking you in advance for your assistance in this matter.
However, I did not support him in 2019
There is no requirement for the parent to provide the student any support. Not one penny. The support requirement is on the student, and "only" the student.
If the student did not provide more than 50% of their own support during the entire tax year, then the parents qualify to claim the student as a dependent on the parent's tax return. Scholarships, grants, 529 distributions, gifts from Aunt Mary, etc., *do* *not* *count* for the student providing their own support.
as he withdrew from his classes early spring semester of 2019, had a full time job, was no longer living with me
If the primary reason the student was not living physically under your roof for the entire tax year was because the student was attending school, then that time spent away at at school is considered to be time spent living under your roof. It doesn't seem to me that my statement applies to your situation.
and had a child in June 2019
Did your son get married in 2019? I am assuming he did not. But he did become a father in 2019. But you say he dropped out of college in "early spring" which I would guess would be in March of 2019? On top of that, he got a job and started working I would expect shortly after leaving college. So it "sounds" to me like your son did provide more than half of his own support for 2019. (That may not be true if your son lived with you after dropping out of college.) If so, then he just flat out does not qualify as your dependent and you can't claim any of the eudcation stuff. Your son will claim all the education stuff for 2019 on his own return.
Now if your son claims the child as his dependent (the mother actually gets first dibs on that) then the fact he's claiming a dependent on his tax return automatically by itself, negates your son from being claimed as a dependent on anyone else's tax return.